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A federal judge in Texas has blocked a\u00a0new rule<\/a>\u00a0by the National Labor Relations Board that would have made it easier for millions of workers to form unions at big companies.<\/p>\n The rule, which was due to go into effect Monday, would have set new standards for determining when two companies should be considered \u201cjoint employers\u201d in labor negotiations.<\/p>\n Under the current NLRB rule, which was passed by a Republican-dominated board in 2020, a company like McDonald\u2019s isn\u2019t considered a joint employer of most of its workers since they are directly employed by franchisees.<\/p>\n The new rule would have expanded that definition to say companies may be considered joint employers if they have the ability to control \u2014 directly or indirectly \u2014 at least one condition of employment. Conditions include wages and benefits, hours and scheduling, the assignment of duties, work rules and hiring.<\/p>\n The NLRB argued a change is necessary because the current rule makes it too easy for companies to avoid their legal responsibility to bargain with workers.<\/p>\n The U.S. Chamber of Commerce and other business groups \u2014 including the American Hotel and Lodging Association, the International Franchise Association and the National Retail Federation \u2014 sued the NLRB in federal court in the Eastern District of Texas in November to block the rule. They argued that the new rule would upend years of precedent and could make companies liable for workers they don\u2019t employ at workplaces they don\u2019t own.<\/p>\n In his decision Friday granting the plaintiffs\u2019 motion for a summary judgement, U.S. District Court Judge J. Campbell Barker concluded that the NLRB\u2019s new rule would be \u201ccontrary to law\u201d and that it was \u201carbitrary and capricious\u201d in regard to how it would change the existing rule.<\/p>\n Barker found that by establishing an array of new conditions to be used to determine whether a company meets the standard of a joint employer, the NRLB\u2019s new rule exceeds \u201cthe bounds of the common law.\u201d<\/p>\n The NRLB is reviewing the court\u2019s decision and considering its next steps in the case, the agency said in a statement Saturday.<\/p>\n \u201cThe District Court\u2019s decision to vacate the Board\u2019s rule is a disappointing setback, but is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts,\u201d said Lauren McFerran, the NLRB\u2019s chairman.<\/p>\n<\/div>\n\nSubscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up<\/a> for free.<\/div>\n<\/div>\n